Trump's tariff hand finally reaches the semiconductor industry! Nvidia H200 and AMD MI325X face 25% "named tariff"

On Wednesday, US President Donald Trump issued an important tariff announcement for the global semiconductor industry, declaring a 25% import tariff on certain imported semiconductors, high-end semiconductor manufacturing equipment, and semiconductor-related derivative products starting on the 15th. At the same time, the Trump administration announced a 25% tariff on certain high-end chip products, including the NVIDIA Corporation (NVDA.US) H200 AI chip and AMD (AMD.US) MI325X AI chip. However, this specific semiconductor tariff policy does not apply to chips imported to support the construction of the American technology supply chain and strengthen domestic semiconductor derivative manufacturing capabilities. In addition, in the near future, the Trump administration emphasized that it may impose broader tariffs on semiconductor and derivative products and introduce corresponding tariff offset plans to encourage the development of the domestic high-end semiconductor manufacturing industry, as previously announced. The White House stated in a statement, "The latest tariff measures against NVIDIA Corporation and AMD do not apply to chips imported to support the construction of the American high-tech supply chain and enhance the domestic manufacturing capabilities of semiconductor derivative products." "In the near future, President Trump may impose broader tariffs on imports of semiconductors and their derivative products, and launch a matching tariff offset plan to encourage domestic high-end manufacturing, as previously announced." The announcement regarding the semiconductor tariff policy is directly related to Section 232 of the Trade Expansion Act of 1962. The US Secretary of Commerce has also completed an investigation on the importance of domestic production of semiconductors and high-end semiconductor manufacturing equipment under Section 232. According to the latest semiconductor investigation results, "the current import quantity and situation of semiconductors, semiconductor manufacturing equipment, and related products threaten national security." The White House stated, "Today's measures will address threats to national security in various ways, including encouraging large-scale semiconductor production in the United States and reducing our country's dependence on foreign sources and foreign semiconductor supply chains. Semiconductors are critical to America's economic, industrial, and military strength, and interruptions in imported supply chains could weaken America's industrial and military capabilities." "President Trump recognizes that restoring the production capacity of domestic semiconductors, semiconductor manufacturing equipment, and derivative products is crucial for the economy and national security," the White House said in a statement. On Tuesday local time, the Trump administration officially approved the sale of NVIDIA Corporation's H200 series AI chips to China and established a new regulatory framework, which may pave the way for larger shipments of H200 chips in the future, but companies must pay taxes to the US government, despite strong opposition from some hawks in Washington. Under the latest H200 export regulations, these chips will be reviewed by a third-party testing laboratory before shipping to China to confirm their artificial intelligence capabilities; the number of chips received by China must not exceed 50% of the total chips sold to US customers. What does Trump's latest tariff policy mean for NVIDIA Corporation and AMD's data center business? The Trump administration announced a 25% tariff on NVIDIA Corporation's H200 and AMD's MI325X chips, mainly targeting chips imported from other countries to the United States and situations where they are imported to the United States and then re-exported (transshipment) - chips that meet certain performance standards and are ultimately deployed overseas (especially likely to be rerouted to other countries). The US had allowed the export of NVIDIA Corporation's H200 to China under certain conditions, with a 25% fee/tariff as a "trade-off." This arrangement was actually a policy compromise, allowing for exports while collecting revenue. In contrast, more advanced AI chip products such as the Blackwell series architecture are still considered more sensitive technology at the US policy level and are therefore not yet within the current export permit range. This means they are fundamentally not allowed to be exported and do not fall under such tariff policies. For both companies, this largely means an increase in cross-border sales costs. If these high-performance AI chips pass through the US customs for export and then are rerouted to overseas markets (especially high-demand markets like China for AI chips), tariffs will become actual costs, increasing actual purchase costs for customers and potentially suppressing demand in overseas markets. Second, it puts pressure on profits and pricing and on semiconductor strategic supply chain restructuring. The Trump administration's latest tariff policy emphasizes reducing the country's reliance on foreign semiconductor supply chains, directly creating significant pressure on companies like NVIDIA Corporation (designers of such chips and fabless in nature) to relocate advanced chip manufacturing processes back to the US. This will significantly increase manufacturing costs and related chip manufacturing capital expenditures. It is important to note that this semiconductor tariff policy targeting NVIDIA Corporation and AMD excludes chips used for domestic data centers, consumer devices, and industrial purposes. That is, these tariffs will not apply to H200/MI325X chips used directly in the US. This latest semiconductor policy does not target more powerful AI chip series products like the Blackwell series, mainly a strategic compromise between controlling exports and allowing some commercial exports. According to reports, Chinese tech companies have ordered more than 2 million H200 AI chips, with each chip's purchase price being around $27,000, far exceeding the inventory of 700,000 H200 chips from NVIDIA Corporation. NVIDIA Corporation CEO Jensen Huang stated at the International Consumer Electronics Show in Las Vegas last week that due to strong demand in China and other regions, the long-term leasing price of H200 AI chips in super-scale cloud computing data centers has risen, and the company is currently working with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to increase the production of H200 AI chips. Good news for US semiconductor equipment manufacturers? Semiconductor equipment manufacturers such as KLA Corporation (KLAC.US), Lam Research Corporation (LRCX.US), and Applied Materials (AMAT.US) may directly benefit from the Trump administration's imposition of a 25% tariff on certain imported semiconductors, semiconductor manufacturing equipment, and derivative products. The Trump administration's tariff measures may drive Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Intel Corporation, and Samsung Electronics, and SK Hynix to significantly shift towards purchasing semiconductor equipment made in the USA for the construction of new or expanded chip manufacturing factories in the US. In addition, US semiconductor equipment manufacturers are also the biggest beneficiaries of the rapidly expanding capacity of AI chips (AI GPU/AI ASIC) and DRAM/NAND storage chips. Citigroup predicts in a research report that the global semiconductor equipment sector will enter a "Phase 2 bullish cycle," indicating a new bull market trajectory after the super bull market of 2024-25. The Citigroup analyst team led by renowned Wall Street semiconductor industry analyst Atif Malik predicts that as demand for AI chips and storage chips continues to surge, the three largest global chip manufacturers - Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Samsung Electronics, Intel Corporation, and storage chip manufacturer SK Hynix - will significantly raise their capital expenditures (capex) guidance for 2026 and beyond in the upcoming financial report disclosures, thus predicting that global fab semiconductor equipment (WFE) spending in 2026 is more likely to approach its "most optimistic forecast outlook." As Microsoft Corporation, Alphabet Inc. Class C, Meta, and other tech giants lead the global construction of super-scale AI data centers, driving chip manufacturers to accelerate the expansion of advanced process AI chip production, CoWoS/3D advanced packaging capacity, and DRAM/NAND storage chip capacity, the long-term bullish logic of the semiconductor equipment sector is becoming increasingly robust. In Citigroup's view, the AI infrastructure frenzy driving the "computing power-storage-advanced chip manufacturing" chain determines that semiconductor equipment capex is stickier than any previous cycle: the massive demand for computing power based on AI training/inference not only drives up demand for advanced logic chips but also significantly boosts the demand intensity of high-end storage chips (especially related to HBM/enterprise-level SSD); with the increasing complexity of chip manufacturing processes, the number of "front-line advanced processes/steps" per wafer increases, making it easier for equipment end sides to reflect the continuity of demand and improve order visibility.